BTIG analyst Mark Palmer believes traditional money transfer operators will inevitably face strong pressure from the cryptocurrency market due to high fees.
The announcement came after Western Union was downgraded to neutral by BTIG Investment Banking. This suggests that the popular money transfer platform may face pressure from shareware alternatives. For example, with Facebook’s new digital money transfer app, Novi. In addition, Palmer sees competition from Strike, a non-custodial wallet that uses the Lightning Network on the Bitcoin blockchain to make payments cheaper.
“It looks like the space for remittances is starting to change,” says the analyst.
Traditional payment systems can lose millions in commissions they receive on transactions. Cryptocurrencies are becoming an increasingly popular tool in the financial system due to the lack of such high fees. For example, companies like Ripple and Stellar have created solutions for cheap cross-border payments.
“It’s crazy these days if you have to go to the physical office of Western Union, give them paper money, and then pay another 25 dollars. Only then will the money be sent, ”Jaime García, a researcher at SGI Canada Insurance, told CNBC in September.
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